Tesla's FSD: A $100 Billion Tech Shift?

Tesla is on the cusp of a major technological revolution, according to Melius Research analyst Rob Wertheimer. He predicts that hundreds of billions of dollars in market value will transfer to Tesla over the next five years, driven by advancements in its full self-driving (FSD) software. This rollout is expected to be a significant event for the public, given that less than 1% of Americans have yet experienced self-driving technology.

Wertheimer highlights that traditional automakers are ill-equipped to compete due to outdated infrastructure and supplier networks, suggesting they will be surpassed by Tesla's innovations. He specifically points to the upcoming A15 chip for FSD as a key catalyst. Despite strong revenue growth in its third quarter, Tesla reported a decline in profit margins and missed earnings per share estimates, showing $0.37 per share against expectations of $0.41.

Tesla's current market valuation reflects high investor expectations, with a price-to-earnings ratio of 280, far exceeding competitors. While its stock performance this year is average compared to some rivals, the premium valuation underscores the market's belief in Tesla's future technological leadership and its potential to redefine the automotive industry through AI and FSD.